Kernan and Another v Sweeney and Another
| Jurisdiction | Ireland |
| Judge | Mr Justice Barr |
| Judgment Date | 19 April 2024 |
| Neutral Citation | [2024] IEHC 225 |
| Court | High Court |
| Docket Number | [Record No. 2018/2374 P] |
[2024] IEHC 225
[Record No. 2018/2374 P]
THE HIGH COURT
JUDGMENT of Mr Justice Barr delivered electronically on the 19 th day of April 2024.
. The plaintiffs' claim is that due to fraudulent misrepresentations and fraudulent conduct on the part of the first defendant, acting as a servant or agent of the second defendant, they made investments that ultimately proved to be disastrous, leading to the loss of their life's savings; an inability to repay their mortgage to the second defendant, leading to entry of a judgment for €298,441.59, and costs, against them on 11 November 2019; and they face ongoing proceedings at the suit of the bank, seeking repossession of their family home.
. In these proceedings, the plaintiffs seek damages for fraudulent misrepresentation, fraudulent conduct, deceit and breach of contract, in a sum in excess of €2m, in respect of the value of their lost investments; together with damages for psychiatric injury said to have been suffered by the plaintiffs as a result of the stress and anxiety caused by the loss of their money and the consequential likely loss of their family home.
. The fraudulent representations were alleged to have been made by the first defendant at or about the time of the making of the investments by the plaintiffs in 2006, 2007 and 2011. It is alleged that the fraudulent conduct on his part arose when dealing with these investments in the years thereafter. The plaintiffs plead that the alleged fraud on the part of the first defendant first came to their attention in 2012.
. The present proceedings issued in March 2018. A defence and counterclaim were filed on behalf of the first defendant in April 2019. The second defendant raised a detailed notice for particulars in respect of the statement of claim on 30 May 2018.
. On 16 November 2022, the second defendant issued its notice of motion in the present application, which seeks an order striking out the plaintiffs' action against it on grounds of delay and want of prosecution.
. On 14 June 2023, the plaintiffs furnished replies to the notice for particulars raised by the second defendant on 30 May 2018.
. Given the response of the plaintiffs to the second defendant's application herein, it is necessary to set out the case as pleaded in some detail. In their statement of claim, delivered on 16 April 2018, the plaintiffs plead that at all material times, the first defendant was a senior portfolio manager/financial adviser, with the second defendant. It was pleaded that in or about 2006, the first plaintiff was introduced to the first defendant at the Letterkenny branch of the second defendant.
. It was pleaded that in May 2006, the plaintiffs were induced by the first defendant to invest €102,598.90 in shares in a company called Scorpion Performance INC. It was pleaded that the first defendant represented to them that their investment would double within one year, to eighteen months. The plaintiffs alleged that they were informed by the first defendant that all due diligence had been carried out and that employees of the second defendant had invested in the company.
. The plaintiffs allege that the first defendant also advised them that the second defendant was backing an investment known as The Lapp Plats/Cove Energy investment; on which basis the plaintiffs invested a further €200,000 in the company. It was represented to the plaintiffs that two other employees of the second defendant, being DK and IT, had also invested similar amounts in the company.
. The plaintiffs plead that they were not given any information about this investment. In particular, they plead that they were not told that these stocks were known as “micro cap stocks”; nor were they informed by the defendants that in June 2011, the Securities and Exchange Commission in the USA had suspended trading in a number of micro cap stocks, including the stocks in which they had invested. Nor were they told that a fraud investigation into the sale and promotion of those stocks, had been commenced in the US.
. The first plaintiff pleaded that in or about 2010, on checking the amount of shareholding that he had in this company, while he had originally been told that he had purchased 906,000 shares as of 19 September 2006; he discovered that he had only 680,000 shares and that 226,000 shares had “gone missing”. The plaintiff further pleaded that he discovered that 25% of the uplift of the value of the shares had been triggered and that the first defendant had received this money.
. The first plaintiff further pleaded that five years after the original investment, the first defendant, who was again representing himself as an employee of the second defendant, advised the first plaintiff to sell all his shares in the company. This was prior to the shares rising dramatically.
. The plaintiff further pleaded that in 2006 and early 2007, he was advised to invest in a company called Global Resources. He invested €86,576 in this company. The plaintiff pleaded that subsequent to making that investment, the first defendant indicated to him that he was leaving the employment of the second defendant; that he was going out on his own; and that he had taken the plaintiff's files with him. The plaintiff pleaded that he had grave concerns about this. He had a meeting with the manager of the second defendant at its Letterkenny branch, who vouched for the first defendant. The plaintiff pleaded that he was never informed that the investment in Global Resources was also a micro cap stock.
. The first plaintiff pleaded that the first defendant opened an account in the first plaintiff's name, with Dolmen Securities in Dublin in April 2011, purportedly to allow the plaintiff to sell certain shares, so that he would have some money, on which to live. The plaintiff pleaded that the first defendant sought and obtained from him an irrevocable power of attorney in respect of the plaintiff's affairs.
. The plaintiff further pleaded that he was induced by the first defendant to invest in a company called Regenicin. This investment was done through a brokerage known as Broadsmoore Capital in New York. It was pleaded that in the events which transpired, the plaintiff lost his entire investment, because the brokers failed to pass the money on to purchase the shares.
. The plaintiff further pleaded that on diverse dates in July and August 2011, three withdrawals were made by the first defendant from the plaintiffs' joint bank account in the total sum of €155,000 and was paid into various accounts controlled by a number of parties, including the first defendant.
. The plaintiff pleaded that when he required money, the first defendant had made a number of small payments into a bank account held in TSB, in favour of the plaintiffs. It was pleaded that throughout the years 2011 and 2012, the plaintiffs were continually reassured by the first defendant that their money was safe and that the investments were improving and increasing in value.
. It was pleaded that in November 2012, the first defendant allocated shares in a company called CMGO Holdings to the plaintiffs. However, no profit was made and no monies were ever paid out to them. In early 2013 and in September/October 2013, matters came to a head between the plaintiff and the first defendant. It is alleged that the first defendant closed the plaintiff's account with Dolmen Securities, without the knowledge of the plaintiffs.
. It was pleaded that in December 2014, the first plaintiff severed his connection with the first defendant. He learnt upon making enquiries with the Central Bank in January 2015, that the first defendant had been delisted as a qualified financial adviser at the end of 2013.
. In their statement of claim, the plaintiffs plead that all of the representations that were made by the first defendant to the first plaintiff at the time of the making of the investments, and during the currency of those investments, were all made fraudulently by the first defendant. It was pleaded that the actions taken by the first defendant in relation to the handling of those investments was also done fraudulently. In total, the losses alleged to have been incurred by the plaintiffs as a result of these investments, came to a sum in excess of €2m.
. On 17 April 2019, a full defence and counterclaim was delivered on behalf of the first defendant. He admitted that he had been employed by a subsidiary of Bank of Ireland Life Holdings Limited, called New Ireland Assurance Company plc, trading as “Bank of Ireland Life”. He admitted that he had been employed as a senior portfolio manager. He had been employed in that position from May 2002, until February 2007.
. The first defendant admitted that he and a number of other individuals, some of whom were employed by the second defendant, had set up an informal group of investors, who shared information in relation to various investment opportunities. He stated that they invested their own money as individuals in companies that had been chosen for investment purposes. They did this having carried out their own due diligence and having regard to their own appetite for risk in relation to the investment. The first defendant accepted that upon request being made by the plaintiff, he was admitted to this investment group. The first defendant denied that the group had ever acted for or on behalf of the second defendant.
. The first defendant admitted that the plaintiffs had made various investments, including in the three companies named in the statement of claim. The first defendant stated that that had been done by the first plaintiff, who held himself out as being an experienced businessman with knowledge of the...
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